Topics
More on Mergers & Acquisitions

CVS Health reportedly in talks to buy Aetna in a deal that would shake up the payer market

Amazon's potential foray into pharmacy business could squeeze providers' bottom lines even more.

Susan Morse, Senior Editor

CVS Health is in talks to buy Aetna for more than $66 billion, The Wall Street Journal has reported.

Aetna said by statement it would not comment on rumors or speculation. The insurer also did not comment on whether the subject would come up during its third quarter earnings call Tuesday at 8:30 a.m.

[Also: CVS continues march into primary care with expansion of MinuteClinic network, chronic disease program]

CVS Health also declined to comment, saying as a matter of policy, it doesn't comment on market rumors such as this.

CVS could benefit through gaining new members for its pharmacy benefit management arm and in negotiations with drugmakers, the WSJ report said.

[Also: Cigna teams with CVS Health in collaboration to rival urgent care clinics]

CVS Health is the largest pharmacy chain in the nation, according to a 2016 list by Drug Channels. But Walgreens Boots Alliance, Express Scripts and Walmart are nipping at its heels for market share.

CVS's pharmacy retail pharmacy share is 14.8 percent, followed by Walgreens at 13.8 percent, the report said. In mail and specialty pharmacy business, CVS is behind Express Scripts, at an 8.6 percent market share of prescription revenues compared to 10.6 percent, respectively.

[Also: Aetna sells its group life and disability business to The Hartford Group for $1.45 billion]

Its fiercest competition however, may come from Amazon, which is considering getting into the prescription pharmaceutical business.

Amazon Pharmacy could prove to be the leading disrupter in the healthcare industry, and was a subject broached by Cleveland Clinic CEO Toby Cosgrove during a recent Medical Innovation Summit.

"We are concerned about major forces, Amazon ... coming at us in purchasing," Cosgrove said. "Without significant consolidation on the part of providers, it's going to put us at a disadvantage. Fifty-five percent of hospitals in the U.S. lose money on patient care. We move on a very small margin."

Steve Ubl, president and CEO of PhRMA said the whole supply chain needs to be evaluated in any review of drug costs, especially as patients pay more in out-of-pocket spending.

To be more competitive, CVS Health has formed partnerships.

In July, CVS Health and Cigna formed Cigna Health Works. Cigna said it expected to save money on urgent care and emergency room visits by having consumers use CVS's retail clinics.

In August, CVS continued its march into primary care through an expansion of Minute Clinics in the greater New York City area, along with a broadening of its diabetes and chronic illness programs.

Aetna, coming off its failed $37 billion merger with Humana last year and the payment of a $1 billion breakup fee, reported a $381 million loss during the first quarter.

This week it announced it was selling The Hartford Group its group life and disability business for $1.45 billion.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com

Show All Comments